If the United States were to pass legislation that would make it easier for people to emigrate to the United States, this would cause.

1. In the long-run the Aggregate Supply curve will:
2. slope upward.
3. slope downward.
4. have a vertical slope.
5. have a horizontal slope.

 

2. If the United States were to pass legislation that would make it easier for people to emigrate to the United States, this would cause
3. a)    the short-run aggregate supply curve to shift to the right
4. b)   the short-run aggregate supply curve to shift to the left
5. c)    the short-run aggregate supply curve to become flatter
6. d)   the short-run aggregate supply curve to become nearly vertical at all levels of output

 

3. An increase in aggregate demand when the economy is operating at full capacity is likely to temporarily result in:
4. a)    an increase in output but no increase in the overall price level
5. b)   an increase in both output and the overall price level
6. c)    no increase in either output or the overall price level
7. d)   an increase in the overall price level but no increase in output

 

4. Potential GDP is the level of aggregate output:
5. a)    that can be produced at a zero unemployment rate
6. b)   that can be sustained in the long run, when wages are “sticky”
7. c)    that can be produced if structural unemployment is zero
8. d)   that can be sustained in the long run when cyclical unemployment is zero

 

5. The proportion of additional income that households spend on consumption is known as the:
6. a)    marginal propensity to consume
7. b)   household spending multiplier
8. c)    average propensity to consume
9. d)   average standard of living

 

6. During a recession, which   of  the following  will   be true?

a)The actual   rate of unemployment will   be lower than the natural  rate.

1. b) Actual GDP will be lower than potential GDP.
2. c) Actual employment will exceed what is  considered  full
3. d) Actual inflation will   be higher than was anticipated.

 

7. The actions of borrowers and  lenders are  coordinated in
8. a) the loanable funds market by the real interest
9. b) the goods and services market by the general   price
10. c) the resource market by wage
11. d) the loanable funds market by the inflation rate.

 

8. If the economy is initially at a point on its long-run aggregate supply curve, a decrease in aggregate demand will:
9. a) permanently increase unemployment
10. b) temporarily increase unemployment
11. c) permanently increase inflation
12. d) temporarily increase inflation

2

 

9. Because nominal wages do not fully adjust to price level changes in the short run:
10. a) the short-run aggregate supply curve is vertical
11. b) the short-run aggregate demand curve is downward sloping
12. c) the short-run aggregate supply curve is upward sloping
13. d) the long-run aggregate demand curve is horizontal

 

10. Fiscal policy is:
11. a) the deliberate control of the money supply to  achieve   macroeconomic goals.
12. b) using the government’s regulatory powers   to improve   economic efficiency.
13. c) the government provision of  goods to improve   economic efficiency.
14. d) using government taxation and expenditure   policies   to achieve   macroeconomic

 

11. In the context of aggregate supply, the short run is  defined as the period  during which:
12. a) some prices are set  by contracts  and cannot be adjusted.
13. b) prices can change, but neither aggregate supply nor aggregate demand can shift.
14. c) individuals have sufficient time to modify their  behavior in response to price
15. d) quantity changes cannot occur in response to changes in relative prices.

 

12. The long-run aggregate supply curve indicates  that in the long run, a decrease  in prices  will lead to
13. a) no change in output.
14. b) an increase in
15. c) a reduction in output.
16. d) an unknown change in output.

 

13. Which of the following will   most likely occur  during the expansionary  phase of a business cycle?
14. a) Real GDP rises, and  unemployment falls.
15. b) Real GDP declines, and inflation
16. c) Interest rates rise, and  the number of business  failures
17. d) Inflation rises, and  employment

 

14. Which of the following is not a function of money:
15. a) means of payment
16. b) an investment to earn a high rate of return
17. c) a store of purchasing power
18. d) a unit to express individual product prices

 

15. A shock that could trigger a recession is a:
16. a) large military buildup.
17. b) large increase in the price of oil.
18. c) sudden unexplained increase in consumption.
19. d) new technological breakthrough.
20. e) large decrease in the price of oil.

 

16. The federal government buys $15 million dollars worth of farm products from the nation’s farmers in order to provide food supplements for the subsidized milk and lunch programs. If the MPC is .90, predict the impact on the national income (Y)?
17. a) Y will increase by $150 million.
18. b) Y will increase by $80 million.
19. c) Y will increase by $30 million.
20. d) Y will increase by $16.7 million.
21. e) Y will increase by $13.5 million.